Customer Racial Discrimination in the Market For Memorabilia: The Case of Baseball

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Customer Racial Discrimination in the Market For
Memorabilia The Case of Baseball

• Clark Nardinelli and Curtis Simon
• Presented by
• Tom Lewin, Joel Borwick, Matt Stinn

2
Objectives

• To determine if customer racial discrimination
  occurs in the baseball card market
• If discrimination does occur, how does it relate
  to the race wage gap in other markets.

3
Discrimination Theories Addressed

• Consumer discrimination based on race
• Why does discrimination exist if it has negative
  effects on profit?
• Are employers, co-workers, or customers
• discriminating?
• This study proposes that customer discrimination
  contributes to a greater degree

4
Study Details

• Study divided into pitchers and hitters
• Blacks, Hispanics, and Whites
• Fielding ability is taken into account somewhat
  by a players position

5
Data Collection

• The data concerns the prices of Topps baseball
  cards of single players from the year 1970
• Source Becketts Official 1989 Price Guide to
  Baseball Cards

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Data Advantages

• Baseball is highly quantified performance is
  easily measured and data is reliable
• Card values are determined by free market
  transaction price
• Standardized pricing guides
• All players considered are out of the game
  performance is already established

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Analysis

• Linear regression customers utility from
  player performance, V, is linearly related to his
  race X. For some constant ß
• V ßX
• Common player value Pc
• Additional performance and race characteristics
  added Pp
• Price of card P Pc Pp
• Players lifetime performance V estimated by Pp
  max 0,V or together
• P Pc max 0,V

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Graphically
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Price for Hitters

• Regressions with coefficients for variables such
  as hits, home runs, at bats
• Position dummies
• White, Hispanic, or Black
• Positive and Negative correlations with the
  dependent variables card Price P Pc and
  Star

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Results
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Price for Pitchers

• Similar model, new variables
• Wins, losses, saves, strikeouts

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Results

• Performance has a positive correlation with price
  after a certain skill level
• Nonwhite hitters sold for 10 less than whites
  (6.4 for Blacks, 17 for Hispanics)
• Nonwhite pitchers sold for 13 less than whites
  (16 for Blacks, 12 for Hispanics)
• Lack of nonwhite statistical significance for
  pitchers except for superstars

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Conclusions

• There is significant evidence that consumer
  discrimination exists in the baseball card market
• Lack of personal contact affects this market
• Consumer discrimination causes race to contribute
  to the wage gap

14
Flaws

• Source of data is from a relatively small market
• Fielding ability cannot be completely controlled
  for
• Different brands of baseball cards were not
  studied

15
Questions?